A few people have asked why I decided to begin this blog. To be completely honest, I did it simply to help the people close to me.
In speaking with friends and family, I’ve noticed that many do not have the time to research the stock market, were not taught financial management, or have preconceived notions about the difficulty of investing their money. My goal is to simply explain these concepts in a way that makes it easy to understand and gets rid of any fear associated with investing.
If this gets to people beyond my immediate circle, that’s fantastic; I would love if everyone in the world understood how money works. But at the bare minimum, if I can help my friends and family, then the time it takes to write these blogs is well worth it.
That’s why my blogs are absolutely free. I don’t want anything in return for sharing what I’ve learned. The more people know, the more power we have, and the better off we will all be. It would be irresponsible for me to not help my friends and family, or anyone else willing to learn.
With that being said, I wanted to give you an idea of my knowledge base and investing experience. First let me give you some background information.
My name is Chris. I'm 34 years old. Born and raised in New York City. Still live here. Married to Meghan - the "M" in CMG. We've been together for 15 years, married for 5. I Played sports my whole life - played baseball in college. I have a degree in mechanical engineering. And I am currently a senior engineering manager for a firm in the city. Now that the hackers have all my information, on to my investing experience.
I have been investing since 2008 when I began working for an engineering firm. I was hired as an intern in June and three months later, I was hired full time. Part of the full time package was a 401(k), or retirement plan.
Initially, like all 20 year olds, I didn’t want any more money to be taken out of my check. I mean, taxes were already taking 30% and I wanted as much money as I could get. The more I could make the more I could save. And saving is the path to get rich, right?
Luckily, my mother sat me down and explained that the employer match was like receiving free money from the company. I may not see it in my check today, but I would certainly be thankful I did it in the long run. But retirement was so far away, why should I care?
Here's how she broke it down to me:
Say I made $1,200 before taxes. Assuming a 25% tax rate, that left me with $900 if I didn’t opt into the 401(k). Great money for a 20 year old, but there was no money going towards retirement.
On the other hand, if I opted into the 401(k) my money goes into the retirement account pre-tax and the employer would match my contribution.
Let's use the same $1,200 example. If I were make a 5% contribution to my 401(k), that would leave $1,140 for the check. After the 25% tax rate I would be left with $855. So I would "lose" $45 per check but not really.
With the company matching my $60 contribution, I would have $120 going into my retirement account each check. It was free money on top of my salary that I would be leaving on the table. Might not seem like a lot, but here's where it gets interesting:
After one year I could either have an additional $2,340 in my savings account earning 0.04% interest, or $6,240 in a 401(k) earning around 8% interest. You can see not only the difference in amounts contributed but the appreciation due to the interest rates.
The choice was obvious, but if I didn’t have someone to show me this, I would have definitely taken the cash up front and not taken advantage of the free money.
If that wasn't enough to convince me, we also looked at the 20 year returns. Assuming no promotions and ignoring inflation, here's what that extra $45 would look like in savings account:
Here is what the $120 in the 401(k) would look like:
There was no question what the right choice was - I opted into the 401(k) and it was the best thing I could have ever done. I was so fortunate to have someone enlighten me, and from that point on I looked at money completely different.
The first few years I maxed out the contributions to my 401(k) and went about my life. I didn’t really pay attention to the market. It was 2008-2009, so I knew we were in a recession, but I didn’t truly understand it at the time. The older guys in the office would talk about the market crash, how their retirement accounts lost 50% of its value and how they couldn’t retire yet because of this.
Truthfully, it was crazy to me that their retirement hinged on the stock market, but I had forty five years to go so I didn't pay too much attention.
That all changed in 2011. I was working on a project in downtown NYC and there was a protest happening a few blocks away in Zuccotti Park. This became known as Occupy Wall Street and the protest was to bring attention to the greedy wall street elites who crashed the markets and caused a recession but weren’t being held liable.
The protest lasted over a month with people camping out in this park. At first, like with my 401(k), I paid no attention. After a week or two, the guys in my office, the same ones who were complaining about not being able to retire, began calling these kids lazy and entitled.
These protestors were there to bring attention to actions of the wall street executives. But the people who were directly affected by those actions weren’t mad at the 1%ers, they were mad at the protestors.
It was surreal to see the middle class attacking the poor, while the rich laughed their way to the bank. They should have been on the same side, but they were conditioned to hate the poor instead of the rich.
It really made me sit back and think. It completely changed my perspective on life and made me want to pay attention to the financial world.
I began researching the cause of the housing crash and market collapse of 2008. I read books by well known investors, such as The Intelligent Investor and The Little Book of Common Sense Investing. I watched financial movies and documentaries. And I began paying attention to the economy, the markets and most importantly my own investments. There was no way I was going to let wall street control my fate.
In 2012, I joined a union with phenomenal benefits. Aside from the great medical and pension benefits, the employer would pay a set hourly rate into an annuity, essentially another form of retirement account. That annuity contribution equated to approximately 10% of my wages. A key difference from the 401(k) was that zero dollars came out of my paycheck; it was all paid for by the employer. Win!
Along with the higher pay and not having to pay for benefits, I had more money in my pocket. If I hadn’t learned about the financial world, I may have parked my money in a savings account or worse, spent it on stupid things I didn't need.
Thankfully, I understood the importance of investing. Since I already had a 401(k) and an annuity, I wanted to invest but still have access to the money without facing a penalty. This meant an IRA didn’t work for me at the time. So I decided to open a self managed investing account.
I was still living at home so all of my money went into this account. It was the perfect time to invest; the market was rebounding from the recession and the S&P 500 gained 26% that year. I was able to beat the market, achieving 40% returns with certain investments outpacing the market.
I could have started a YouTube page, became a guru and charged people to learn my secret investing strategy. But I’m not an asshat. Instead, I took those gains and used them as a down payment on an NYC condo in in 2013. Note - I did have to pay a capital gains tax, but I still made around 32% after taxes.
While the self invested account was my focus, my annuity continued to grow from my employer contributions and my 401k was growing simply from the market appreciation. I was very fortunate to have listened and started early.
2013 was also the year I first learned about Bitcoin. A fellow engineer explained it as the “currency of the internet” and "how we will take back power from the banks." Unfortunately, that explanation made me think he was crazy and thus wrote off the project as a scam. Really wish I listened.
Bitcoin was around $100 at the time and as I write this, one Bitcoin is $58,000. For those keeping track at home, that’s a 57,900% increase. Oh, the possibilities!
FYI - I first purchased Bitcoin in 2016 and have added over the years but I wish I would have listened with an open mind and done the research.
In the past 8 years, I have advanced in my career which has allowed me to invest more. I have continued to manage my investments regularly and in that time, I have beat the market every year except for one. Thanks to a crypto bear market and a corruption at the an end of the year in the stock market, I finished 2018 even with the market.
As I have become more experienced and knowledgeable, I have diversified my portfolio, investing in stocks, cryptocurrencies, REITs, start-ups through angel investing and of course, my very own company. I have seen bull runs, bubbles, market crashes, pump and dumps, bankruptcies, recessions, a pandemic that halted the world - basically every scenario you can think of. And most importantly, I have done a ton of research on what has happened in the past. I believe history may not repeat itself, but it often rhymes.
I take investing seriously, but more importantly I genuinely enjoy trying to reach my ultimate goal. No, it's not to be wealthy. My goal is freedom. Freedom to do what I want when I want - that’s what drives me.
If I can have my investments cover my monthly costs completely, then I can achieve that freedom. I can retire. Because the American dream is a fucking nightmare to me.
You know, that ideal life that is ingrained in our heads from the day we are born; a white picket fence, perfect family, a career, blah, blah, blah. To some, that really is the dream life. To me, it’s not. Take on a ton of debt and work for the rest of your life to pay it off, then maybe, just maybe, you can retire at 65 - no thanks!
Despite what we have been told, retirement is not some arbitrary age of 65 years old. Retirement is when your assets can pay for your lifestyle. For some, it’s 40 years old. For others, it’s never. That's the reality.
What you do now determines your retirement age. You can minimize debt and maximize your investments OR you can maximize your debt and minimize your investments. Your choice.
For me, retiring doesn't mean never working again. It just means I won't be forced to work for someone else. I can do whatever I want. That’s my dream. And I'm on the path to make that a reality.
Remember, don't compare yourself to anyone else. I began investing when I was 20, so I may be able to reach my goal a lot sooner. Just find a realistic timeline for you. Ten to fifteen years is a whole lot better than the next forty years at a job you hate, no?
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I am not a licensed financial advisor or financial professional. This is not investing advice. I am simply sharing my research and opinion based on that research. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
This blog contains some affiliate links. If you purchase any service through one of these links, I may earn a small commission at no extra cost to you.